Yes, you haven’t missed anything! I think it stems from Zwift putting quite a lot of emphasis on w/kg in the riders list and that on the old watopia loop it was a decent way of grading ability but you’re quite right in your speed analysis.

Zwift provides all desired options, however it’s up to the community to choose which they use. And thus far most have gone down the route of w/kg, despite its shortcomings on many of the flat surface routes.

Average speed classifications also have their own downsides however. Given ranges are often quite large, e.g. 27 - 32, 32 - 37 or 37 - 42. Such a 5 kmph gap is a rather large one. Many may struggle. Furthermore, with no given wattage rates, on small climbs gaps may very easily form.